S&P 500 (SPY) Report – 10/02/23

Good morning traders!

The S&P 500 ($SPY) is trading below Friday’s close. Let’s get into it… 

It’s the start of a new quarter, and stock futures trade slightly below Friday’s close after a potential government shutdown in the US was narrowly averted over the weekend. The surprise turnaround came as Congress brokered a last-minute deal on Saturday, preventing what seemed like an inevitable government shutdown. This came alongside Wall Street’s growing concerns over China’s economic growth following a dismal forecast.

The recent agreement in Congress brought short-term relief to investors fearful of the economic and stock market impacts of a government shutdown. However, this comfort may not last as it only pauses the budget discussions temporarily. Additionally, the market faces ongoing challenges. The last quarter ended with notable stock losses, driven by the Federal Reserve’s decision to keep rates higher, along with increasing oil prices and Treasury yields.

Furthermore, the US funding deal also suggests that the Federal Reserve might increase rates in November, a view shared by some traders. All eyes will be on Federal Reserve Chair, Jerome Powell, as he partakes in a discussion with Philadelphia Fed President Patrick Harker, which might reveal the central bank’s future plans. In the meantime, the World Bank’s reduced forecast for China’s 2024 economic growth, while keeping its 2023 outlook steady, raises concerns about the demand in China’s economy which is still recovering from the pandemic and facing a debt crisis in its property sector.

Monday Economic Events:
PMI Manufacturing Final 9:45am ET – High Volatility Expected
ISM Manufacturing Index 10:00am ET – High Volatility Expected
Construction Spending 10:00am ET

Fed Speaker Scheduled:
Jerome Powell 10:00am ET – High Volatility Expected
Michael Barr 1:00pm ET
John Williams 1:30pm ET
Loretta Mester 7:30pm ET

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